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Chart of the Day – A New Era at the Fed and the Hawkish Shadow of the ECB. EUR/USD at a Turning Point

EURUSD starts today’s session in a noticeably tense yet somewhat uneven atmosphere, where the market lacks a single dominant narrative. On one side, investors are already looking ahead to the evening and the Federal Reserve’s decision, which could set the tone for the US dollar over the coming weeks. On the other side, Europe refuses to fade into the background, as fresh inflation data once again highlights that the ECB story and its future policy response to price pressures remain unresolved.

In practice, EURUSD is trading in an environment where no clear narrative has taken control. Market participants are simultaneously trying to price in the Fed, the ECB, and the widening divergence between them, which naturally increases volatility and means that any new impulse can quickly shift the balance of forces. In such a setup, the currency pair becomes particularly sensitive to changes in expectations, especially on a day filled with major macroeconomic events.

Source: xStation5

What is driving EURUSD today? Kevin Warsh’s debut and the Fed credibility test

Today’s Federal Reserve meeting carries special significance as it is the first under the leadership of Kevin Warsh. Markets are almost fully aligned in expecting interest rates to remain unchanged in the 3.50–3.75% range, but the decision itself is not the key focus. Far more important will be the tone of communication and how the new Fed Chair outlines the future path of monetary policy. Warsh takes control at a time when US inflation remains sticky and the economy continues to show relative resilience, limiting room for an early policy easing cycle. This makes today’s message potentially a directional signal for the entire Fed cycle. Even a subtle shift toward a more hawkish stance could strengthen the US dollar and add downward pressure on EURUSD.

Europe: inflation in line with forecasts, but pressure persists

On the European side, today brought the final release of May HICP inflation. The reading of 3.2% year on year came in exactly in line with consensus expectations, which helps stabilize short-term market positioning. However, it does not change the broader picture, where inflation remains elevated compared to last year. This keeps price pressures firmly on the radar of the European Central Bank. Particular attention continues to be drawn to persistent core inflation and the services component, both of which still show no clear disinflationary trend.

ECB and rising risks of further tightening

The lack of any positive surprise in inflation data leaves the ECB in a challenging position. After its recent rate hike, markets are once again reassessing whether the tightening cycle is truly over. If price pressures in services remain elevated and core inflation fails to meaningfully ease, the European Central Bank may be forced into another move later this year. Such a scenario limits the downside potential for the euro and acts as an important counterbalance to US dollar strength.

Market picture: tension between two central banks

EURUSD remains a market driven by two opposing narratives. On one side, investors are focused on the Fed and its impact on US dollar valuation. On the other, persistent inflation in Europe continues to support cautious expectations regarding the ECB. In this environment, markets become highly sensitive to central bank communication, while the technical structure of price action reinforces the sense of a fragile equilibrium, vulnerable to sharp shifts.

Key takeaways

  • Today’s EURUSD session is shaped by two opposing forces that broadly offset each other
  • The Fed remains the primary driver for the US dollar and could set the tone for the coming period
  • Europe continues to face persistent inflation with no clear signs of meaningful easing
  • The market remains in a wait-and-see mode with no dominant narrative
  • The key resolution will likely come only after the evening Fed decision and press conference
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United Kingdom CPI inflation holds steady in April: What 2.8% means for British Pound

The United Kingdom (UK) headline Consumer Price Index (CPI) climbed 2.8% over the year in May, compared to a rise of 2.8% in April, the data released by the Office for National Statistics (ONS) showed on Wednesday. The UK inflation reading was well above the Bank of England’s (BoE) 2% inflation target.

The core CPI (excluding volatile food and energy items) rose 2.6% year-over-year (YoY) in the same period, compared to April’s 2.5% print and came in softer than the forecast of 2.7%.

Meanwhile, the monthly UK CPI arrived at 0.2% in May versus a rise of 0.7% reported in April, below the market consensus of 0.4%.

The British Pound (GBP) attracts some sellers in an immediate reaction to the UK inflation report. At the time of writing, the GBP/USD pair is trading 0.05% lower on the day to trade at 1.3420.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD-0.04%0.02%-0.08%0.03%0.12%0.19%-0.22%
EUR0.04%0.06%-0.02%0.06%0.15%0.26%-0.17%
GBP-0.02%-0.06%-0.09%0.03%0.13%0.19%-0.20%
JPY0.08%0.02%0.09%0.10%0.19%0.22%-0.10%
CAD-0.03%-0.06%-0.03%-0.10%0.09%0.16%-0.21%
AUD-0.12%-0.15%-0.13%-0.19%-0.09%0.09%-0.29%
NZD-0.19%-0.26%-0.19%-0.22%-0.16%-0.09%-0.38%
CHF0.22%0.17%0.20%0.10%0.21%0.29%0.38%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

What do United Kingdom CPI inflation data mean for the British Pound?

The UK CPI is a measure of consumer price inflation, the rate at which the prices of goods and services bought by households rise or fall. This figure is one of the most important economic indicators for the GBP because it measures inflation and plays a key role in the Bank of England’s (BoE) monetary policy decisions.

Hotter-than-expected CPI Inflation suggests stronger price pressures in the economy. Traders may expect the BoE to keep interest rates higher-for-longer or consider additional rate hikes.

On the other hand, softer-than-expected outcomes may indicate easing price pressures in the UK economy. Markets could increase their bets on future BoE rate cuts.

Technical Analysis: GBP/USD maintains a neutral outlook in the near-term 

Chart Analysis GBP/USD

In the daily chart, GBP/USD holds just above the Bollinger middle band, while still capped by the 100-day simple moving average (SMA). This configuration suggests a neutral near-term bias, with price consolidating inside the Bollinger envelope rather than trending. The Relative Strength Index (RSI) at roughly 50 hints at balanced momentum, leaving the pair dependent on a break outside this nearby band-and-MA corridor to define the next directional move.

On the topside, initial resistance emerges at the 100-day SMA around 1.3460, with the Bollinger upper band near 1.3498 forming a secondary barrier if buyers extend the recovery. On the downside, immediate support is seen at the Bollinger middle band around 1.3420, ahead of a deeper cushion at the Bollinger lower band close to 1.3345, where a break would expose a broader corrective phase.

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US Dollar Index weakens to near 99.50 on US‑Iran peace deal optimism ahead of Fed rate decision

  • US Dollar Index softens to around 99.50 in Wednesday’s Asian session.
  • A US-Iran peace deal will be signed at Switzerland’s mountainside Burgenstock resort on Friday. 
  • Fed is expected to leave its benchmark interest rate unchanged at a target range of 3.50% to 3.75% at the June meeting. 

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 99.50 during the Asian trading hours on Wednesday. The DXY extends the decline amid optimism surrounding a potential US-Iran peace deal. The US Federal Reserve (Fed) interest rate decision will take center stage later on Wednesday. 

US Vice President JD Vance said on Tuesday that US President Donald Trump may decide to release a preliminary deal to end the war with Iran before Friday, after the US president said the agreement had already been signed. Trump stated that the Strait of Hormuz will be open by Friday and that the full text of the peace deal will be released in a “formal setting.”

The Swiss foreign ministry confirmed that a US-Iran deal aimed at ending the Middle East war will be signed at Switzerland’s mountainside Burgenstock resort on Friday. Hopes of a peace agreement between the US and Iran could undermine a safe-haven currency such as the US Dollar against its rivals. 

The Fed is due to announce its next policy decision on Wednesday. Economists expect the US central bank to keep its benchmark rate in a range of 3.50% to 3.75% as it waits to see how the war’s energy-price shock ripples through the economy. 

The focus will be on new Fed Chairman Kevin Warsh and the handling of the press conference that follows the interest rate decision. Any hawkish comments from Fed officials could lift the DXY in the near term. 

Markets are now pricing in nearly a 64% chance of a US central bank interest rate hike in December this year after the peace deal, down from 69% last week, according to the CME FedWatch tool.

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GBP/USD Price Forecast: Treading water around 1.3400 with central banks in focus

  • GBP/USD keeps hovering around 1.3400, lacking a clear bias.
  • Investors await details from the US-Iran deal and interest rate decisions by the Fed and the BoE.
  • Technically, the pair is in a consolidating phase, trapped between 1.3300 and 1.3500.

The British Pound (GBP) is trading practically flat against the US Dollar (USD) on Tuesday. The Doji candles at the 1.3400 area highlight an indecisive market, as traders await details on the US-Iran peace deal and monetary policy decisions by the US Federal Reserve (Fed) and the Bank of England (BoE) to make investment decisions.

US Vice President JD Vance affirmed earlier on the day that no tolls will be applied to vessels crossing the Strait of Hormuz and that nuclear inspectors will return to Iran. Investors, however, remain reluctant to take excessive risks, awaiting confirmation from Tehran.+

Markets are also attentive to the interest rate decisions from the Fed and the BoE to assess how major central banks will react to the peace deal. The Fed is expected to keep rates on hold on Wednesday, with the new Chairman Kevin Warsh, likely to adopt a more dovish stance than his predecessor Jerome Powell.

On Thursday, the BoE is highly likely to follow suit on rates and to hint at a steady monetary policy for the coming months. In this case, the vote split and the minutes of the meeting are expected to provide further details about the bank’s forward guidance.

Technical Analysis: Key levels are 1.3300 and 1.3500

GBP/USD Chart Analysis

GBP/USD trades at 1.3410, halfway through the last four weeks’ range, between 1.3300 and 1.3500. Indicators in the 4-hour chart highlight a lack of clear momentum, with the Relative Strength Index (RSI) flat at the 50 midline and the Moving Average Convergence Divergence (MACD) fractionally below zero, together hinting at a consolidative bias.

The pair was rejected at the 1.3460 area on Monday, although the key resistance area lies between 1.3485 and 1.3505, which has held bulls since mid-May. Further up, the next target is the May 14 high, near 1.3550.

On the downside, Friday’s low, at 1.3380, might provide some support ahead of the bottom of the range, at the 1.3300 area (May 18, June 8 lows). Below here, the next bearish target is the late March to early April lows around 1.3170.

(The technical analysis of this story was written with the help of an AI tool.)

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.03%-0.00%-0.05%0.09%0.18%0.07%0.03%
EUR0.03%0.03%0.02%0.13%0.20%0.10%0.07%
GBP0.00%-0.03%0.00%0.11%0.16%0.08%0.04%
JPY0.05%-0.02%0.00%0.11%0.19%0.10%0.08%
CAD-0.09%-0.13%-0.11%-0.11%0.08%-0.03%-0.06%
AUD-0.18%-0.20%-0.16%-0.19%-0.08%-0.09%-0.12%
NZD-0.07%-0.10%-0.08%-0.10%0.03%0.09%-0.03%
CHF-0.03%-0.07%-0.04%-0.08%0.06%0.12%0.03%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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Japanese Yen: BoJ hike fails to lift currency – ING

ING’s Chris Turner says the Bank of Japan’s 25 bp hike to 1.00% is no game-changer for the Japanese Yen, as policy remains accommodative and real rates stay comfortably negative. With markets not expecting another hike until December, USD/JPY is seen skewed toward a retest of 160.70 and possibly 161/162, where further BoJ FX intervention is anticipated.

Accommodative stance keeps Yen vulnerable

“As expected, the BoJ today hiked the policy rate by 25bp to 1.00%.”

“The market thinks the next follow-up hike will not emerge until December.”

“This leaves Japan with comfortably negative real interest rates and leaves the yen as a funding currency if volatility slows even more this summer and renewed interest emerges in the carry trade.”

“Tomorrow’s FOMC meeting will also have a strong say in where USD/JPY goes from here.”

“So far, FX intervention has been ineffective and until it becomes clear that the dollar is ready to turn lower, USD/JPY looks skewed to a retest of this year’s 160.70 high, with risks to the 161/162 area, where more BoJ intervention shoul

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AUD/USD falls after RBA decision despite maintaining a hawkish stance

The Reserve Bank of Australia (RBA) left its cash rate unchanged at 4.35% , ending a streak of three consecutive rate hikes and opting for its first pause of the year. The decision was widely expected and unanimous, but the tone of the statement remained clearly cautious. The RBA emphasized that inflation is still too high and warned that further monetary tightening remains possible if price pressures fail to ease.

Inflation remains the main concern

The RBA noted that inflation accelerated noticeably in the second half of 2025, partly due to growing demand and supply-side pressures in the economy. Although CPI inflation declined to 4.2% in April , it remains well above the RBA’s 2–3% target range , while underlying inflation also remains elevated. Key inflation risks include:

  • Higher fuel and energy prices feeding through into transportation, food, construction materials, and services costs.
  • Businesses passing higher input costs on to consumers.
  • Persistently high inflation in the services sector.
  • Wage pressures, including recent increases in the minimum wage and regulated salaries.
  • Uncertainty regarding the pace of normalization in global oil supplies.

The RBA’s primary concern is that the energy-driven inflation shock could become entrenched.

Slowing economy gives the RBA room to pause

The main argument for keeping rates unchanged was weaker economic activity data. Australia’s economy expanded by just 0.3% q/q in the first quarter , compared with 0.9% in Q4 2025 , largely due to softer consumer spending. Households are facing increasing pressure from higher mortgage repayments, rising living costs, and declining savings. The labor market has also started to cool. The unemployment rate rose to 4.5% , its highest level in several years, although the RBA noted that broader labor market indicators remain relatively resilient. At the same time, the slowdown is not yet severe enough to justify a shift in policy direction.

Monetary policy outlook: a pause, not a pivot toward easing

The RBA’s message is clear: the current decision represents a pause to assess incoming data, not the end of the tightening cycle. In other words, it is a classic

hawkish hold :

  • Interest rates remain at 4.35% .
  • The RBA wants to assess the impact of previous rate hikes.
  • Inflation remains too high to consider easing policy.
  • Oil and energy prices remain significant upside risks to inflation.
  • Further rate hikes remain possible if price pressures prove persistent.

Nevertheless, most major Australian banks expect rates to remain at 4.35% , with potential rate cuts not arriving until 2027 . Westpac remains the most hawkish, forecasting two additional rate hikes this year , which would lift the cash rate to 4.85% .

AUD reaction

The Australian dollar weakened following the RBA decision, suggesting that investors interpreted the rate hold as reducing the near-term probability of another hike. AUDUSD fell from around 0.7060 to 0.7050 immediately after the announcement, losing approximately 0.3% on the day . The reaction was relatively modest because the decision itself was fully anticipated by markets. However, the decline in the currency indicates that investors placed greater weight on the pause and signs of economic slowing than on the RBA’s warnings that further rate increases remain possible.

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Trade of The Day – AUD/USD

Facts:

The pair bounced off the key resistance area near 0.7090 Short – term trend remains downward from the mid-May

Recommendation:

Trade: Short position on AUDUSD at market price Target: 0.6988, 0.6948 Stop: 0.7110

Opinion:

AUDUSD has been trading in a downward move recently. Looking at the H4 interval, one can see that the price bounced off the key 0.7090 resistance area. Red area near 0.7090 handle on the chart below is marked with previous price reactions, 100-period moving average from H1 interval, as well as upper limit of 1:1 structure. Taking this into account, continuation of the downward move looks to be the base case scenario for now. We recommend going short AUDUSD at market price with two targets: 0.6988 and 0.6948. We also recommend placing a stop loss order at 0.7110.

Source: xStation5

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Indian Rupee trades firmly amid signs of renewed FIIs’ interest towards Indian stock market

  • The Indian Rupee trades firmly against the US Dollar due to multiple tailwinds.
  • Lower oil prices and signs of improvement in FIIs sentiment towards the Indian stock market have strengthened the Indian Rupee.
  • The Fed is expected to leave interest rates steady on Wednesday.

The Indian Rupee (INR) opens firmly against the US Dollar (USD) on Tuesday. The USD/INR pair trades lower around 94.58 as lower oil prices due to the successive reopening of the Strait of Hormuz, following the signing of a peace deal between the United States (US) and Iran, and signs of improvement in sentiment of overseas investors towards the Indian stock market have strengthened the Indian Rupee.

In the opening session, the MCX Crude Oil contract expiring on June 18 rises slightly to near 7,640, but is close to its over eight-week low of 7,550 posted on Monday.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to outperform when oil prices remain lower.

US-Iran signs peace deal

On Monday, US President Donald Trump announced that a peace deal with Iran had signed and the Strait of Hormuz had fully reopened. Trump added that details of the deal will be released shortly, but confirmed that Tehran won’t have nuclear weapons.

Investors await details of the deal to get clarification regarding whether Hormuz remains toll-free or not. The resumption of normal traffic will keep oil prices lower, a scenario that will be favorable for the Indian currency.

FIIs turns of net buyers for first time in June

On Monday, Foreign Institutional Investors (FIIs) emerged as net buyers in the Indian stock market for the first time in June after diluting their stake worth Rs. 46,430.42 crore in the first two weeks. The sentiment of foreign investors towards the Indian equity market appears to have improved due to the US-Iran peace deal signing, which has eased the global risk-off impulse. In Monday’s session, FIIs bought shares worth Rs. 200.05 crore.

Investors await two-day Fed policy meeting

This week, the major trigger for the US Dollar will be the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. According to the CME FedWatch tool, the Fed is certain to leave interest rates unchanged in the 3.50%-3.75%.

Investors will pay close attention to the Fed’s monetary policy guidance under the new Chairman Kevin Warsh, and interest and economic projections in the near-to-longer term.

US President Trump has provided significant breathing room to Chairman Warsh by giving him a free hand on decision-making, stating in recent days that he wants him to “do whatever he wants” and “be totally independent”, CNBC reported. While Trump was seen criticizing former Chairman Jerome Powell numerous times for not reducing interest rates quickly, despite inflationary pressures remaining higher.

Technical Analysis: USD/INR stays below 20-day EMA

USD/INR trades weakly at around 94.58, extending a corrective phase below its 20-day exponential moving average (EMA) at 95.2580, which now acts as the first topside barrier and keeps the near-term bias tilted lower.

The Relative Strength Index (RSI) at 42.6 remains below the midline, suggesting waning bullish momentum and leaving the pair vulnerable while it holds under the short-term EMA cap.

On the topside, a daily close above the 20-day EMA around 95.26 would be needed to ease immediate downside pressure and open the way for a more sustained rebound towards 96.00. Looking down, the pair could extend the decline to the May 7 low at 94.03 if it fails to hold the June 15 low at 94.43.